Homebuilder ETF: Oh Breakout, Where Art Thou?
Homebuilders were one of the strongest industries early in the pandemic as city dwellers headed to the suburbs. While the social trend has continued, bullishness has faded in the stocks.
This chart shows the broken trend line in the iShares US Home Construction Index. It apparently tried to form a bullish ascending triangle against resistance at $58.50 but never broke out. ITB is now at risk of breaking down if dip buyers back out.
Next, prices are under the 50- and 100-day moving averages, unlike most stocks in the market. That indicates the longer-term momentum is weakening.
Third, ITB's weekly chart shows a bearish inside candle before Christmas. A bearish outside bar followed the next week.
Finally, the last rally on December 17 and 18 resulted from Lennar’s better-than-expected quarterly results. The lack of follow-through suggests the market doubts the staying power of that positive news.
Investors could be wary of soaring prices for materials like lumber and copper. Even with home prices rising and inventories tight, profit margins could be at risk.
Note: This chart uses the custom script Smart Relative Strength.
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This chart shows the broken trend line in the iShares US Home Construction Index. It apparently tried to form a bullish ascending triangle against resistance at $58.50 but never broke out. ITB is now at risk of breaking down if dip buyers back out.
Next, prices are under the 50- and 100-day moving averages, unlike most stocks in the market. That indicates the longer-term momentum is weakening.
Third, ITB's weekly chart shows a bearish inside candle before Christmas. A bearish outside bar followed the next week.
Finally, the last rally on December 17 and 18 resulted from Lennar’s better-than-expected quarterly results. The lack of follow-through suggests the market doubts the staying power of that positive news.
Investors could be wary of soaring prices for materials like lumber and copper. Even with home prices rising and inventories tight, profit margins could be at risk.
Note: This chart uses the custom script Smart Relative Strength.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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